Arizona Real Estate License Practice Exam 2025 - Free Real Estate Practice Questions and Study Guide

Question: 1 / 1505

What is the first month's interest for a loan of $120,000 at 9% interest?

$900

To determine the first month's interest for a loan of $120,000 at an interest rate of 9%, you need to use the formula for calculating interest based on the loan amount and the annual interest rate.

First, convert the annual interest rate into a monthly rate. Since interest is typically stated as an annual percentage, you divide the annual rate (9%) by 12 to get the monthly rate.

So, the monthly interest rate is:

\[

\text{Monthly rate} = \frac{9\%}{12} = 0.75\%

\]

Next, convert this percentage into a decimal for calculation:

\[

0.75\% = \frac{0.75}{100} = 0.0075

\]

Now, apply this monthly rate to the loan amount of $120,000:

\[

\text{First month's interest} = \text{Loan amount} \times \text{Monthly rate}

\]

\[

\text{First month's interest} = 120,000 \times 0.0075 = 900

\]

Thus, the first month's interest amount is $900. This computation clearly shows how the percentage is applied to the principal amount,

Get further explanation with Examzify DeepDiveBeta

$974

$1,080

$1,170

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